Exhibit 10.1
INDUSTRIAL REAL ESTATE LEASE
(Multi-Tenant Facility)
ARTICLE ONE: BASIC TERMS
This
Article One contains the Basic Terms of this Lease between the
Landlord and Tenant named below. Other Articles, Sections and
Paragraphs of the Lease referred to in this Article One explain and
define the Basic Terms and are to be read in conjunction with the
Basic Terms.
Section 1.01. Date of Lease:
May 10,
2019.
Section
1.02. Landlord (include legal entity
):
JM SKY HARBOR PROPERTIES LLC, an
Arizona limited liability company.
Address
of Landlord:
9061 Santa
Monica Blvd., Los Angeles, CA 90069.
Section 1.03. Tenant (include legal
entity):
Wrap
Technologies, Inc., a Delaware corporation.
Address
of Tenant:
4620 Arville
Street, Suite E, Las Vegas, NV 89103
.
Section 1.04.
Property:
The Property is part of
Landlord's multi-tenant real property development known as
Sky Harbor Business Park
II
and described or depicted in Exhibit "A" (the "Project").
The Project includes the land, the buildings and all other
improvements located on the land, and the common areas described in
Paragraph 4.05(a). The Property is (include street address,
approximate square footage and description):
an approximate 11,256 square foot office/warehouse located at 1817
W. 4
th
Street,
Tempe, AZ (the “Property”).
For purposes of the Lease, it is
agreed and stipulated by both Landlord and Tenant that the rentable
area shall be deemed to be 11,256 square feet regardless of any
inaccuracy therein.
Section 1.05.
Lease Term:
three (3)
years and
two (2)
months
beginning
June 1,
2019
, or such other date as is specified in this Lease, and
ending on
July 31,
2022.
Section 1.06.
Permitted Uses:
(See Article Five)
Administrative offices,
warehouse,
assembly, training and distribution of
non-lethal security and law enforcement products including
restraints.
Section 1.07.
Tenant's Guarantor:
(If none, so state)
None.
Section 1.08.
Brokers:
(See Article Fourteen) (If
none, so state)
Landlord's
Broker:
Commercial
Properties (Breinholt, Soldo & Edwards)
.
Tenant's
Broker:
Lee &
Associates (Kafka & Coppola).
Section 1.09.
Commission Payable to Landlord's Broker:
(See Article Fourteen)
Per
separate agreement.
Section 1.10.
Initial Security Deposit:
(See Section
3.03) $
8,364.00.
Section 1.11.
Vehicle Parking Spaces Allocated to
Tenant:
(See Section 4.05)
twenty (20).
Section
1.12. Rent and Other Charges Payable by Tenant:
(a) BASE RENT:
SEVEN THOUSAND SIX HUNDRED FIFTY FOUR
AND NO/100
Dollars (
$7,654.00
) per month for months
three (3)
through
twelve (12)
, as
provided in Section 3.01, and shall be increased on the first day
of the
13
th
,
25
th
and 37
th
month(s) after the Commencement Date as provided in
Rider No. 1 attached
hereto.
(b) OTHER PERIODIC PAYMENTS:
(i) Real
Property Taxes (See Section 4.02); (ii) Utilities (See Section
4.03); (iii) Insurance Premiums (See Section 4.04); (iv) Tenant's
Initial Pro Rata Share of Common Area Expenses
100%
(See Section 4.05); (v)
Maintenance, Repairs and Alterations (See Article
Six).
Section 1.13.
Landlord's Share of Profit on Assignment or
Sublease:
(See Section 9.04)
fifty
percent (
50
%) of the Profit (the
"Landlord's Share").
Section 1.14.
Riders:
The following Riders are
attached to and made a part of this Lease: (If none, so state)
Rider No. 1, Option to
Extend Term Lease Rider, Exhibit “A” (Site Plan), and
Exhibit “1” (Floor Plan).
ARTICLE TWO: LEASE TERM
Section 2.01.
Lease of Property For Lease Term.
Landlord leases the Property to Tenant and Tenant leases the
Property from Landlord for the Lease Term. The Lease Term is for
the period stated in Section 1.05 above and shall begin and end on
the dates specified in Section 1.05 above, unless the beginning or
end of the Lease Term is changed under any provision of this Lease.
The "Commencement Date" shall be the date specified in Section 1.05
above for the beginning of the Lease Term, unless advanced or
delayed under any provision of this Lease.
Section 2.02
.
Delay in Commencement.
(a)
Landlord shall not
be liable to Tenant if Landlord does not deliver possession of the
Property to Tenant on the Commencement Date. Landlord's
non-delivery of the Property to Tenant on that date shall not
affect this Lease or the obligations of Tenant under this Lease
except that the Commencement Date shall be delayed until Landlord
delivers possession of the Property to Tenant and the Lease Term
shall be extended for a period equal to the delay in delivery of
possession of the Property to Tenant, plus the number of days
necessary to end the Lease Term on the last day of a month. If
Landlord does not deliver possession of the Property to Tenant
within thirty (30) days after the Commencement Date, Tenant may
elect to cancel this Lease by giving written notice to Landlord
within ten (10) days after the thirty (30)-day period ends. If
Tenant gives such notice, the Lease shall be canceled and neither
Landlord nor Tenant shall have any further obligations to the
other. If Tenant does not give such notice, Tenant's right to
cancel the Lease shall expire and the Lease Term shall commence
upon the delivery of possession of the Property to Tenant. If
delivery of possession of the Property to Tenant is delayed,
Landlord and Tenant shall, upon such delivery, execute an amendment
to this Lease setting forth the actual Commencement Date and
expiration date of the Lease. Failure to execute such amendment
shall not affect the actual Commencement Date and expiration date
of the Lease.
(b)
Landlord shall not
be required to deliver possession of the Property to Tenant until
Tenant complies with its obligation to provide evidence of
liability insurance to Landlord as outlined in Section 4.04 of this
Lease. Pending delivery of such evidence to Landlord, Tenant shall
be required to perform all of its obligations under this Lease from
and after mutual Lease execution, including the payment of Rent,
regardless of Landlord’s election to withhold possession
pending receipt of such evidence of liability insurance.
Furthermore, if Tenant is required to perform any other conditions
prior to or concurrent with the Commencement Date, the Commencement
Date shall occur, but Landlord may elect to withhold possession
until such conditions are satisfied.
Section 2.03.
Early Occupancy.
If Tenant occupies the
Property prior to the Commencement Date, Tenant's occupancy of the
Property shall be subject to all of the provisions of this Lease.
Early occupancy of the Property shall not advance the expiration
date of this Lease. Tenant shall pay Base Rent and all other
charges specified in this Lease for the early occupancy
period.
Section
2.04.
Holding
Over.
Tenant shall vacate the
Property upon the expiration or earlier termination of this Lease.
Tenant shall reimburse Landlord for and indemnify Landlord against
all actual damages which Landlord incurs from Tenant's delay in
vacating the Property. If Tenant does not vacate the Property upon
the expiration or earlier termination of the Lease and Landlord
thereafter accepts rent from Tenant, Tenant's occupancy of the
Property shall be a "month-to-month" tenancy, subject to all of the
terms of this Lease applicable to a month-to-month tenancy, except
that the Base Rent then in effect shall be increased by fifty
percent (50%).
ARTICLE THREE: BASE RENT
Section 3.01.
Time and Manner of Payment.
Upon
execution of this Lease, Tenant shall pay Landlord the Base Rent in
the amount stated in Paragraph 1.12(a) above for the third month of
the Lease Term. On the first day of the fourth month of the Lease
Term and each month thereafter, Tenant shall pay Landlord the Base
Rent, in advance, without offset, deduction or prior demand. The
Base Rent shall be payable at Landlord's address or at such other
place as Landlord may designate in writing.
Section 3.02.
Security Deposit.
Upon the execution of
this Lease, Tenant shall deposit with Landlord a cash Security
Deposit in the amount set forth in Section 1.10 above. Landlord may
apply all or part of the Security Deposit to any unpaid rent or
other charges due from Tenant or to cure any other defaults of
Tenant. If Landlord uses any part of the Security Deposit, Tenant
shall restore the Security Deposit to its full amount within ten
(10) days after Landlord's written request. Tenant's failure to do
so shall be a material default under this Lease. No interest shall
be paid on the Security Deposit. Landlord shall not be required to
keep the Security Deposit separate from its other accounts and no
trust relationship is created with respect to the Security
Deposit.
Section 3.03.
Termination; Advance Payments.
Upon
termination of this Lease under Article Seven (Damage or
Destruction), Article Eight (Condemnation) or any other termination
not resulting from Tenant's default, and after Tenant has vacated
the Property in the manner required by this Lease, Landlord shall
refund or credit to Tenant (or Tenant's successor) the unused
portion of the Security Deposit, any advance rent or other advance
payments made by Tenant to Landlord, and any amounts paid for real
property taxes and other reserves which apply to any time periods
after termination of the Lease.
Section 3.04.
Application of Payments.
All
payments received by Landlord from Tenant shall be applied to the
oldest payment obligation owed by Tenant to Landlord. No
designation by Tenant, either in a separate writing or on a check
or money order, shall modify this Section or have any force or
effect.
ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT
Section 4.01.
Additional Rent.
All charges payable by
Tenant other than Base Rent are called "Additional Rent." Unless
this Lease provides otherwise, Tenant shall pay all Additional Rent
then due with the next monthly installment of Base Rent. The term
"rent" shall mean Base Rent and Additional Rent.
Section
4.02. Property Taxes.
(a)
Real Property Taxes.
Tenant shall pay
all real property taxes on the Property (including any fees, taxes
or assessments against, or as a result of, any tenant improvements
installed on the Property by or for the benefit of Tenant) during
the Lease Term. Subject to Paragraph 4.02(c) below, such payment
shall be made at least ten (10) days prior to the delinquency date
of the taxes. Within such ten (10)-day period, Tenant shall furnish
Landlord with satisfactory evidence that the real property taxes
have been paid. Landlord shall reimburse Tenant for any real
property taxes paid by Tenant covering any period of time prior to
or after the Lease Term. If Tenant fails to pay the real property
taxes when due, Landlord may pay the taxes and Tenant shall
reimburse Landlord for the amount of such tax payment as Additional
Rent.
(b)
Definition of "Real Property Tax
”.
"Real property tax" means: (i) any fee, license fee, license tax,
business license fee, commercial rental tax, levy, charge,
assessment, penalty or tax imposed by any taxing authority against
the Property; (ii) any tax on the Landlord's right to receive, or
the receipt of, rent or income from the Property or against
Landlord's business of leasing the Property; (iii) any tax or
charge for fire protection, streets, sidewalks, road maintenance,
refuse or other services provided to the Property by any
governmental agency; (iv) any tax imposed upon this transaction or
based upon a re-assessment of the Property due to a change of
ownership, as defined by applicable law, or other transfer of all
or part of Landlord's interest in the Property; and (v) any charge
or fee replacing any tax previously included within the definition
of real property tax. "Real property tax" does not, however,
include Landlord's federal or state income, franchise, inheritance
or estate taxes.
(c)
Joint Assessment.
If the Property is not
separately assessed, Landlord shall reasonably determine Tenant's
share of the real property tax payable by Tenant under Paragraph
4.02(a) from the assessor's worksheets or other reasonably
available information. Tenant shall pay such share to Landlord
within fifteen (15) days after receipt of Landlord's written
statement.
(d) Personal
Property Taxes.
(i)
Tenant shall pay all taxes
charged against trade fixtures, furnishings, equipment or any other
personal property belonging to Tenant. Tenant shall try to have
personal property taxed separately from the Property.
(ii)
If any of Tenant's personal
property is taxed with the Property, Tenant shall pay Landlord the
taxes for the personal property within fifteen (15) days after
Tenant receives a written statement from Landlord for such personal
property taxes.
Section 4.03.
Utilities.
Tenant shall pay, directly to
the appropriate supplier, the cost of all natural gas, heat, light,
power, sewer service, telephone, water, refuse disposal and other
utilities and services supplied to the Property. However, if any
services or utilities are jointly metered with other property,
Landlord shall make a reasonable determination of Tenant's
proportionate share of the cost of such utilities and services and
Tenant shall pay such share to Landlord within fifteen (15) days
after receipt of Landlord's written statement.
Section 4.04. Insurance Policies.
(a)
Liability Insurance
. During the Lease
Term, Tenant shall maintain a policy of commercial general
liability insurance (sometimes known as broad form comprehensive
general liability insurance) insuring Tenant against liability for
bodily injury, property damage (including loss of use of property)
and personal injury arising out of the operation, use or occupancy
of the Property. Tenant shall name Landlord and Landlord’s
property management company as an additional insureds under such
policy.
The initial
amount of such insurance shall be Two Million Dollars ($2,000,000)
per occurrence and shall be subject to periodic increase based upon
inflation, increased liability awards, recommendation of Landlord's
professional insurance advisers and other relevant factors. The
liability insurance obtained by Tenant under this Paragraph 4.04(a)
shall (i) be primary and non-contributing; (ii) contain
cross-liability endorsements; and (iii) insure Landlord against
Tenant's performance under Section 5.05, if the matters giving rise
to the indemnity under Section 5.05 result from the negligence of
Tenant. Tenant shall provide such insurance endorsements as
required by Landlord to evidence the coverage as set forth in the
Lease. The amount and coverage of such insurance shall not limit
Tenant's liability nor relieve Tenant of any other obligation under
this Lease. Landlord may also obtain comprehensive public liability
insurance in an amount and with coverage determined by Landlord
insuring Landlord against liability arising out of ownership,
operation, use or occupancy of the Property. The policy obtained by
Landlord shall not be contributory and shall not provide primary
insurance.
(b)
Property and Rental Income Insurance.
During the Lease Term, Landlord shall maintain policies of
insurance covering loss of or damage to the Property in the full
amount of its replacement value. Such policy shall contain an
Inflation Guard Endorsement and shall provide protection against
all perils included within the classification of fire, extended
coverage, vandalism, malicious mischief, special extended perils
(all risk), sprinkler leakage and any other perils which Landlord
deems reasonably necessary. Landlord shall have the right to obtain
flood and earthquake insurance. Landlord shall not obtain insurance
for Tenant's fixtures or equipment or building improvements
installed by Tenant on the Property. During the Lease Term,
Landlord shall also maintain a rental income insurance policy, with
loss payable to Landlord, in an amount equal to one year's Base
Rent, plus estimated real property taxes and insurance premiums.
Tenant shall be liable for the payment of any deductible amount
under Landlord's or Tenant's insurance policies maintained pursuant
to this Section 4.04, in an amount not to exceed Fifteen Thousand
Dollars ($15,000.00). Tenant shall not do or permit anything to be
done which invalidates any such insurance policies.
(c)
Payment of Premiums.
Tenant shall pay
all premiums for the insurance policies described in Paragraphs
4.04(a) and (b) (whether obtained by Landlord or Tenant) within
fifteen (15) days after Tenant's receipt of a copy of the premium
statement or other evidence of the amount due. For insurance
policies maintained by Landlord which cover improvements on the
entire Project, Tenant shall pay Tenant's prorated share of the
premiums, in accordance with the formula in Paragraph 4.05(e) for
determining Tenant's share of Common Area costs. If insurance
policies maintained by Landlord cover improvements on real property
other than the Project, Landlord shall deliver to Tenant a
statement of the premium applicable to the Property showing in
reasonable detail how Tenant's share of the premium was computed.
If the Lease Term expires before the expiration of an insurance
policy maintained by Landlord, Tenant shall be liable for Tenant's
prorated share of the insurance premiums. Before the Commencement
Date, Tenant shall deliver to Landlord a copy of any policy of
insurance, which Tenant is required to maintain under this Section
4.04. At least thirty (30) days prior to the expiration of any such
policy, Tenant shall deliver to Landlord a renewal of such policy.
As an alternative to providing a policy of insurance, Tenant shall
have the right to provide Landlord a certificate of insurance,
executed by an authorized officer of the insurance company, showing
that the insurance which Tenant is required to maintain under this
Section 4.04 is in full force and effect and containing such other
information which Landlord reasonably requires.
(d) General
Insurance Provisions.
(i)
Any insurance which Tenant is
required to maintain under this Lease shall include a provision
which requires the insurance carrier to give Landlord not less than
thirty (30) days' written notice prior to any cancellation or
modification of such coverage.
(ii)
If Tenant fails to deliver any
policy, certificate or renewal to Landlord required under this
Lease within the prescribed time period or if any such policy is
canceled or modified during the Lease Term without Landlord's
consent, Landlord may obtain such insurance, in which case Tenant
shall reimburse Landlord for the cost of such insurance within
fifteen (15) days after receipt of a statement that indicates the
cost of such insurance.
(iii)
Tenant shall maintain all
insurance required under this Lease with companies holding a
"General Policy Rating" of A-12 or better, as set forth in the most
current issue of "Best Key Rating Guide". Landlord and Tenant
acknowledge the insurance markets are rapidly changing and that
insurance in the form and amounts described in this Section 4.04
may not be available in the future. Tenant acknowledges that the
insurance described in this Section 4.04 is for the primary benefit
of Landlord. If at any time during the Lease Term, Tenant is unable
to maintain the insurance required under the Lease, Tenant shall
nevertheless maintain insurance coverage which is customary and
commercially reasonable in the insurance industry for Tenant's type
of business, as that coverage may change from time to time.
Landlord makes no representation as to the adequacy of such
insurance to protect Landlord's or Tenant's interests. Therefore,
Tenant shall obtain any such additional property or liability
insurance which Tenant deems necessary to protect Landlord and
Tenant.
(iv)
Unless prohibited under any
applicable insurance policies maintained, Landlord and Tenant each
hereby waive any and all rights of recovery against the other, or
against the officers, employees, agents or representatives of the
other, for loss of or damage to its property or the property of
others under its control, if such loss or damage is covered by any
insurance policy in force (whether or not described in this Lease)
at the time of such loss or damage. Upon obtaining the required
policies of insurance, Landlord and Tenant shall give notice to the
insurance carriers of this mutual waiver of
subrogation.
Section
4.05. Common Areas; Use, Maintenance and Costs.
(a)
Common Areas.
As used in this Lease,
"Common Areas" shall mean all areas within the Project which are
available for the common use of tenants of the Project and which
are not leased or held for the exclusive use of Tenant or other
tenants, including, but not limited to, parking areas, driveways,
sidewalks, loading areas, access roads, corridors, landscaping and
planted areas. Landlord, from time to time, may change the size,
location, nature and use of any of the Common Areas, convert Common
Areas into leaseable areas, construct additional parking facilities
(including parking structures) in the Common Areas, and increase or
decrease Common Area land and/or facilities. Tenant acknowledges
that such activities may result in inconvenience to Tenant. Such
activities and changes are permitted if they do not materially
affect Tenant's use of the Property.
(b)
Use of Common Areas.
Tenant shall have
the nonexclusive right (in common with other tenants and all others
to whom Landlord has granted or may grant such rights) to use the
Common Areas for the purposes intended, subject to such reasonable
rules and regulations as Landlord may establish from time to time.
Tenant shall abide by such rules and regulations and shall use its
best effort to cause others who use the Common Areas with Tenant's
express or implied permission to abide by Landlord's rules and
regulations. At any time, Landlord may close any Common Areas to
perform any acts in the Common Areas as, in Landlord's judgment,
are desirable to improve the Project. Tenant shall not interfere
with the rights of Landlord, other tenants or any other person
entitled to use the Common Areas.
(c)
Specific Provision re: Vehicle Parking.
Tenant shall be entitled to use the number of vehicle parking
spaces in the Project allocated to Tenant in Section 1.11 of the
Lease without paying any additional rent. All of Tenant’s
parking spaces shall be limited to vehicles no larger than standard
size automobiles or pickup utility vehicles. Tenant shall not cause
large trucks or other large vehicles to be parked within the
Project or on the adjacent public or private streets. Temporary
parking of large delivery vehicles in the Project may be permitted
by the rules and regulations established by Landlord. Vehicles
shall be parked only in striped parking spaces and not in
driveways, loading areas or other locations not specifically
designated for parking. Handicapped spaces shall only be used by
those legally permitted to use them. If Tenant parks more vehicles
in the parking area than the number set forth in Section 1.11 of
this Lease, such conduct shall be a material breach of this Lease.
In addition to Landlord's other remedies under the Lease, Tenant
shall pay a daily charge determined by Landlord for each such
additional vehicle.
(d)
Maintenance of Common Areas.
Landlord
shall maintain the Common Areas in good order, condition and repair
and shall operate the Project, in Landlord's sole discretion, as a
first-class industrial/commercial real property development. Tenant
shall pay Tenant's pro rata share (as determined below) of all
costs incurred by Landlord for the operation and maintenance of the
Common Areas. Common Area costs include, but are not limited to,
costs and expenses for the following: gardening and landscaping;
utilities, water and sewage charges; maintenance of signs (other
than tenants' signs); premiums for liability, property damage, fire
and other types of casualty insurance on the Common Areas and
worker's compensation insurance; all property taxes and assessments
levied on or attributable to the Common Areas and all Common Area
improvements; all personal property taxes levied on or attributable
to personal property used in connection with the Common Areas;
all costs and fees associated with
appealing or protesting the property taxes on the Project;
straight-line depreciation on personal property owned by Landlord
which is consumed in the operation or maintenance of the Common
Areas; rental or lease payments paid by Landlord for rented or
leased personal property used in the operation or maintenance of
the Common Areas; fees for required licenses and permits;
repairing, resurfacing, repaving, maintaining, painting, lighting,
cleaning, refuse removal, security and similar items; reserves for
future roof replacement and exterior painting and other appropriate
reserves; and a reasonable allowance to Landlord for Landlord's
supervision of the Common Areas (not to exceed five percent (5%))
of the gross rents of the Project for the calendar year
, provided that, at Landlord’s option, the
Project gross rents used for such calculation shall be
proportionately adjusted to reflect a ninety-five percent (95%)
stabilized occupancy
). Landlord may cause any or all of such
services to be provided by third parties and the cost of such
services shall be included in Common Area costs. Common Area costs
shall not include depreciation of real property, which forms part
of the Common Areas.
(e)
Tenant's Share and Payment.
Tenant shall
pay Tenant's annual pro rata share of all Common Area costs
(prorated for any fractional month) upon written notice from
Landlord that such costs are due and payable, and in any event
prior to delinquency. Tenant's pro rata share shall be calculated
by dividing the square foot area of the Property, as set forth in
Section 1.04 of the Lease, by the aggregate square foot area of the
Project which is leased or held for lease by tenants, as of the
date on which the computation is made. Tenant's initial pro rata
share is set out in Paragraph 1.12(b). Any changes in the Common
Area costs and/or the aggregate area of the Project leased or held
for lease during the Lease Term shall be effective on the first day
of the month after such change occurs. Landlord may, at Landlord's
election, estimate in advance and charge to Tenant as Common Area
costs, all real property taxes for which Tenant is liable under
Section 4.02 of the Lease, all insurance premiums for which Tenant
is liable under Section 4.04 of the Lease, all maintenance and
repair costs for which Tenant is liable under Paragraph 6.03(b) and
Section 6.04 of the Lease, and all other Common Area costs payable
by Tenant hereunder. At Landlord's election, such statements of
estimated Common Area costs shall be delivered monthly, quarterly
or at any other periodic intervals to be designated by Landlord.
Landlord may adjust such estimates at any time based upon
Landlord's experience and reasonable anticipation of costs. Such
adjustments shall be effective as of the next rent payment date
after notice to Tenant. Within sixty (60) days after the end of
each calendar year of the Lease Term, Landlord shall deliver to
Tenant a statement prepared in accordance with generally accepted
accounting principles setting forth, in reasonable detail, the
Common Area costs paid or incurred by Landlord during the preceding
calendar year and Tenant's pro rata share (the “Annual
Statement”). Upon receipt of such statement, there shall be
an adjustment between Landlord and Tenant, with payment to or
credit given by Landlord (as the case may be) so that Landlord
shall receive the entire amount of Tenant's share of such costs and
expenses for such period. Within sixty (60) days after receiving
Landlord’s Annual Statement, Tenant, at Tenant’s sole
cost and expense, may, upon advance written notice to Landlord and
during Landlord’s reasonable business hours, cause a review
of Landlord’s books and records directly related to costs for
which Landlord has charged Tenant with respect to the preceding
calendar year only to determine the accuracy of Landlord’s
Annual Statement. Such inspection shall take place in
Landlord’s offices and Tenant shall keep its review of the
books and records confidential. If Tenant retains an agent, at
Tenant’s sole cost and expense, to review Landlord’s
records, the agent shall be an independent accountant of national
standing which is reasonably acceptable to Landlord, is not
compensated on a contingency basis and has entered into a
confidentiality agreement with Landlord. Within sixty (60) days
after the records are made available to Tenant, Tenant shall have
the right to give Landlord written notice (an "Objection Notice")
stating in specific detail any objection to the Annual Statement
for that year. If Tenant provides Landlord with a timely Objection
Notice, Landlord and Tenant shall work together in good faith to
resolve any issues raised in Tenant’s Objection Notice. If
Tenant fails to provide Landlord with a timely Objection Notice,
Landlord’s Annual Statement shall be deemed final and
binding, and Tenant shall have no further right to review or object
to such statement. If Landlord and Tenant determine that Common
Area costs for the calendar year are less than reported, Landlord
shall provide Tenant with a credit against the next installment of
Additional Rent in the amount of the overpayment by Tenant.
Likewise, if Landlord and Tenant determine that Common Area costs
for the calendar year are greater than reported, Tenant shall pay
Landlord the amount of any underpayment within thirty (30) days
after such determination. The records reviewed by Tenant shall be
treated as confidential. In no event shall Tenant be permitted to
review Landlord’s records or to dispute any statement of
Common Area costs unless Tenant has paid and continues to pay all
Rent when due.
Section 4.06.
Late Charges.
Tenant's failure to pay
rent promptly may cause Landlord to incur unanticipated costs. The
exact amount of such costs is impractical or extremely difficult to
ascertain. Such costs may include, but are not limited to,
processing and accounting charges and late charges which may be
imposed on Landlord by any ground lease, mortgage or trust deed
encumbering the Property. Therefore, if Landlord does not receive
any rent payment on or before the fifth (5
th
) calendar day of
the month in which it becomes due, Tenant shall pay Landlord a late
charge equal to ten percent (10%) of the over due amount. The
parties agree that such late charge represents a fair and
reasonable estimate of the costs Landlord will incur by reason of
such late payment.
Section 4.07.
Interest on Past Due Obligations.
Any
amount owed by Tenant to Landlord which is not paid when due shall
bear interest at the rate of fifteen percent (15%) per annum from
the due date of such amount. However, interest shall not be payable
on late charges to be paid by Tenant under this Lease. The payment
of interest on such amounts shall not excuse or cure any default by
Tenant under this Lease. If the interest rate specified in this
Lease is higher than the rate permitted by law, the interest rate
is hereby decreased to the maximum legal interest rate permitted by
law.
ARTICLE FIVE: USE OF PROPERTY
Section 5.01.
Permitted Uses.
Tenant may use the
Property only for the Permitted Uses set forth in Section 1.06
above.
Section 5.02.
Manner of Use.
Tenant shall not cause or
permit the Property to be used in any way which constitutes a
violation of any law, ordinance, or governmental regulation or
order, which annoys or interferes with the rights of tenants of the
Project, or which constitutes a nuisance or waste. Tenant shall
obtain and pay for all permits, including a Certificate of
Occupancy, required for Tenant's occupancy of the Property and
shall promptly take all actions necessary to comply with all
applicable statutes, ordinances, rules, regulations, orders and
requirements regulating the use by Tenant of the Property,
including the Occupational Safety and Health Act.
Section 5.03.
Hazardous Materials.
As used in this
Lease, the term "Hazardous Material" means any flammable items,
explosives, radioactive materials, hazardous or toxic substances,
material or waste or related materials, including any substances
defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials" or "toxic substances" now
or subsequently regulated under any applicable federal, state or
local laws or regulations, including without limitation
petroleum-based products, paints, solvents, lead, cyanide, DDT,
printing inks, acids, pesticides, ammonia compounds and other
chemical products, asbestos, PCBs and similar compounds, and
including any different products and materials which are
subsequently found to have adverse effects on the environment or
the health and safety of persons. Tenant shall not cause or permit
any Hazardous Material to be generated, produced, brought upon,
used, stored, treated or disposed of in or about the Property by
Tenant, its agents, employees, contractors, sub-lessees or invitees
without the prior written consent of Landlord. Landlord shall be
entitled to take into account such other factors or facts as
Landlord may reasonably determine to be relevant in determining
whether to grant or withhold consent to Tenant’s proposed
activity with respect to Hazardous Material. In no event, however,
shall Landlord be required to consent to the installation or use of
any storage tanks on the Property.
Section 5.04.
Signs and Auctions.
Tenant shall not
place any signs on the Property without Landlord's prior written
consent which consent shall not be unreasonably withheld provided
such signage is in compliance with the Project sign criteria and
the City of Tempe codes. All expenses associated with a sign,
including the cost, installation, removal, restoration and any
maintenance shall be the sole responsibility of Tenant. Tenant
shall not conduct or permit any auctions or sheriff's sales at the
Property.
Section 5.05
.
Indemnity.
Tenant shall indemnify
Landlord against and hold Landlord harmless from any and all costs,
claims or liability arising from: (a) Tenant's use of the Property;
(b) the conduct of Tenant's business or anything else done or
permitted by Tenant to be done in or about the Property, including
any contamination of the Property or any other property resulting
from the presence or use of Hazardous Material caused or permitted
by Tenant; (c) any breach or default in the performance of Tenant's
obligations under this Lease; (d) any misrepresentation or breach
of warranty by Tenant under this Lease; or (e) other acts or
omissions of Tenant. Tenant shall defend Landlord against any such
cost, claim or liability at Tenant's expense with counsel
reasonably acceptable to Landlord or, at Landlord's election,
Tenant shall reimburse Landlord for all legal fees and costs
incurred by Landlord in connection with any such claim. As a
material part of the consideration to Landlord, Tenant assumes all
risk of damage to property or injury to persons in or about the
Property arising from any cause, and Tenant hereby waives all
claims in respect thereof against Landlord, except for any claim
arising out of Landlord's gross negligence or willful misconduct.
As used in this Section, the term "Tenant" shall include Tenant's
employees, agents, contractors and invitees, if
applicable.
Section
5.06.
Landlord's Access.
Landlord or its
agents may enter the Property at all reasonable times to show the
Property to potential buyers, investors or tenants or other
parties; to do any other act or to inspect and conduct tests in
order to monitor Tenant's compliance with all applicable
environmental laws and all laws governing the presence and use of
Hazardous Material; or for any other purpose Landlord deems
necessary. Landlord shall give Tenant twenty four (24) hours prior
verbal notice of such entry, except in the case of an emergency.
Landlord may place customary "For Sale" or "For Lease" signs on the
Property.
Section 5.07.
Quiet Possession.
If Tenant pays the
rent and complies with all other terms of this Lease, Tenant may
occupy and enjoy the Property for the full Lease Term, subject to
the provisions of this Lease.
ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS &
ALTERATIONS
Section
6.01.
Existing Conditions.
Tenant accepts the
Property in its condition as of the execution of the Lease, as
shown on Exhibit “1” attached hereto, subject to all
recorded matters, laws, ordinances, and governmental regulations
and orders. Except as provided herein, Tenant acknowledges that
neither Landlord nor any agent of Landlord has made any
representation as to the condition of the Property or the
suitability of the Property for Tenant's intended use. Tenant
represents and warrants that Tenant has made its own inspection of
and inquiry regarding the condition of the Property and is not
relying on any representations of Landlord or any Broker with
respect thereto. If Landlord or Landlord's Broker has provided a
Property Information Sheet or other Disclosure Statement regarding
the Property, a copy is attached as an exhibit to the
Lease.
Section 6.02.
Exemption of Landlord from Liability.
Landlord shall not be liable for any damage or injury to the
person, business (or any loss of income therefrom), goods, wares,
merchandise or other property of Tenant, Tenant's employees,
invitees, customers or any other person in or about the Property,
whether such damage or injury is caused by or results from: (a)
fire, steam, electricity, water, gas or rain; (b) the breakage,
leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures or any
other cause; (c) conditions arising in or about the Property or
upon other portions of the Project, or from other sources or
places; or (d) any act or omission of any other tenant of the
Project. Landlord shall not be liable for any such damage or injury
even though the cause of or the means of repairing such damage or
injury are not accessible to Tenant. The provisions of this Section
6.02 shall not, however, exempt Landlord from liability for
Landlord's gross negligence or willful misconduct.
Section
6.03. Landlord's Obligations.
(a)
Except as provided in Article
Seven (Damage or Destruction) and Article Eight (Condemnation),
Landlord shall keep the following in good order, condition and
repair: the foundations, exterior walls and roof of the Property
(including painting the exterior surface of the exterior walls of
the Property not more often than once every five (5) years, if
necessary) and all components of electrical, mechanical, plumbing,
heating and air conditioning systems and facilities located in the
Property which are concealed or used in common by tenants of the
Project. However, Landlord shall not be obligated to maintain or
repair windows, doors, plate glass or the interior surfaces of
exterior walls. Landlord shall make repairs under this Section 6.03
within a reasonable time after receipt of written notice from
Tenant of the need for such repairs.
(b)
Tenant shall pay or reimburse
Landlord for all costs Landlord incurs under Paragraph 6.03(a)
above as Common Area costs as provided for in Section 4.05 of the
Lease. Tenant waives the benefit of any statute in effect now or in
the future which might give Tenant the right to make repairs at
Landlord’s expense or to terminate this Lease due to
Landlord’s failure to keep the Property in good order,
condition and repair.
Section
6.04. Tenant's Obligations.
(a)
Except as provided in Section
6.03, Article Seven (Damage or Destruction) and Article Eight
(Condemnation), Tenant shall keep all portions of the Property
(including structural, nonstructural, interior, systems and
equipment) in good order, condition and repair (including interior
repainting and refinishing, as needed). If any portion of the
Property or any system or equipment in the Property which Tenant is
obligated to repair cannot be fully repaired or restored, Tenant
shall promptly replace such portion of the Property or system or
equipment in the Property, regardless of whether the benefit of
such replacement extends beyond the Lease Term. Tenant shall
maintain a preventive maintenance contract providing for the
regular inspection and maintenance of the heating, air conditioning
system and evaporative cooling system by a licensed heating and air
conditioning contractor, unless Landlord maintains such equipment
under Section 6.03 above
or if the
equipment is not used in common with other tenants of the Project,
Landlord may, at Landlord's option, elect to maintain the heating,
air conditioning and evaporative cooling systems (if any) and
Tenant shall pay or reimburse Landlord for all costs Landlord
incurs for such maintenance or replacement
. If any part of
the Property or the Project is damaged by any act or omission of
Tenant, Tenant shall pay Landlord the cost of repairing or
replacing such damaged property, whether or not Landlord would
otherwise be obligated to pay the cost of maintaining or repairing
such property. It is the intention of Landlord and Tenant that at
all times Tenant shall maintain the portions of the Property which
Tenant is obligated to maintain in an attractive, first-class and
fully operative condition.
(b)
Tenant shall fulfill all of
Tenant's obligations under this Section 6.04 at Tenant's sole
expense. If Tenant fails to maintain, repair or replace the
Property as required by this Section 6.04, Landlord may, upon ten
(10) days' prior notice to Tenant (except that no notice shall be
required in the case of an emergency), enter the Property and
perform such maintenance or repair (including replacement, as
needed) on behalf of Tenant. In such case, Tenant shall reimburse
Landlord for all costs incurred in performing such maintenance or
repair immediately upon demand.
Section
6.05. Alterations, Additions, and Improvements.
(a)
Tenant shall not make any
alterations, additions, or improvements to the Property without
Landlord's prior written consent, except for non-structural
alterations which do not exceed Ten Thousand Dollars ($10,000) in
cost cumulatively over the Lease Term and which are not visible
from the outside of any building of which the Property is part.
Landlord may require Tenant to provide demolition and/or lien and
completion bonds in form and amount satisfactory to Landlord.
Tenant shall promptly remove any alterations, additions, or
improvements constructed in violation of this Paragraph 6.05(a)
upon Landlord's written request. All alterations, additions, and
improvements shall be done in a good and workmanlike manner, in
conformity with all applicable laws and regulations, and by a
contractor approved by Landlord. Upon completion of any such work,
Tenant shall provide Landlord with "as built" plans, copies of all
construction contracts, and proof of payment for all labor and
materials.
(b)
Tenant shall pay when due all
claims for labor and material furnished to the Property. Tenant
shall give Landlord at least ten (10) days' prior written notice of
the commencement of any work on the Property, regardless of whether
Landlord's consent to such work is required. Landlord may elect to
record and post notices of non-responsibility on the
Property.
Section 6.06.
Condition upon Termination.
Upon the
termination of the Lease, Tenant shall surrender the Property to
Landlord, broom clean and in the same condition as received except
for ordinary wear and tear which Tenant was not otherwise obligated
to remedy under any provision of this Lease. However, Tenant shall
not be obligated to repair any damage, which Landlord is required
to repair under Article Seven (Damage or Destruction). In addition,
Landlord may require Tenant to remove any alterations, additions or
improvements (whether or not made with Landlord's consent) prior to
the expiration of the Lease and to restore the Property to its
prior condition, all at Tenant's expense. All alterations,
additions and improvements which Landlord has not required Tenant
to remove shall become Landlord's property and shall be surrendered
to Landlord upon the expiration or earlier termination of the
Lease, except that Tenant may remove any of Tenant's machinery or
equipment which can be removed without material damage to the
Property. Tenant shall repair, at Tenant's expense, any damage to
the Property caused by the removal of any such machinery or
equipment. In no event, however, shall Tenant remove any of the
following materials or equipment (which shall be deemed Landlord's
property) without Landlord's prior written consent: any power
wiring or power panels; lighting or lighting fixtures; wall
coverings; drapes, blinds or other window coverings; carpets or
other floor coverings; heaters, air conditioners or any other
heating or air conditioning equipment; fencing or security gates;
or other similar building operating equipment and
decorations.
ARTICLE SEVEN: DAMAGE OR DESTRUCTION
Section
7.01. Partial Damage to Property.
(a)
Tenant shall notify Landlord in
writing immediately upon the occurrence of any damage to the
Property. If the Property is only partially damaged (i.e., less
than fifty percent (50%) of the Property is untenantable as a
result of such damage or less than fifty percent (50%) of Tenant's
operations are materially impaired) and if the proceeds received by
Landlord from the insurance policies described in Paragraph 4.04(b)
are sufficient to pay for the necessary repairs, this Lease shall
remain in effect and Landlord shall repair the damage as soon as
reasonably possible. Notwithstanding the foregoing, in event
Landlord does not elect to file a claim under its insurance
policies, however elects to repair the damage or destruction to the
Property, Tenant shall pay Landlord the amount of the deductible
set forth in Paragraph 4.04(b) of this Lease or the cost to repair
the damage, whichever is the lesser amount. Landlord may elect (but
is not required) to repair any damage to Tenant's fixtures,
equipment, or improvements.
(b)
If the insurance proceeds
received by Landlord are not sufficient to pay the entire cost of
repair, or if the cause of the damage is not covered by the
insurance policies which Landlord maintains under Paragraph
4.04(b), Landlord may elect either to (i) repair the damage as soon
as reasonably possible, in which case this Lease shall remain in
full force and effect, or (ii) terminate this Lease as of the date
the damage occurred. Landlord shall notify Tenant within thirty
(30) days after receipt of notice of the occurrence of the damage
whether Landlord elects to repair the damage or terminate the
Lease. If Landlord elects to repair the damage, Tenant shall pay
Landlord the "deductible amount" under Landlord's insurance
policies and, if the damage was due to an act or omission of
Tenant, or Tenant's employees, agents, contractors or invitees, the
difference between the actual cost of repair and any insurance
proceeds received by Landlord. Notwithstanding the foregoing, in
event Landlord does not file a claim under its insurance policies,
however elects to repair the damage or destruction, Tenant shall
pay Landlord the amount of the deductible set forth in Paragraph
4.04(b) of this Lease or the cost to repair the damage, whichever
is the lesser amount. If Landlord elects to terminate the Lease,
Tenant may elect to continue this Lease in full force and effect,
in which case Tenant shall repair any damage to the Property and
any building in which the Property is located. Tenant shall pay the
cost of such repairs, except that upon satisfactory completion of
such repairs, Landlord shall deliver to Tenant any insurance
proceeds received by Landlord for the damage repaired by Tenant.
Tenant shall give Landlord written notice of such election within
ten (10) days after receiving Landlord's termination
notice.
(c)
If the damage to the Property
occurs during the last six (6) months of the Lease Term and such
damage will require more than thirty (30) days to repair, either
Landlord or Tenant may elect to terminate this Lease as of the date
the damage occurred, regardless of the sufficiency of any insurance
proceeds. The party electing to terminate this Lease shall give
written notification to the other party of such election within
thirty (30) days after Tenant's notice to Landlord of the
occurrence of the damage.
Section 7.02.
Substantial or Total Destruction.
If the
Property is substantially or totally destroyed by any cause
whatsoever (i.e., the damage to the Property is greater than
partial damage as described in Section 7.01), and regardless of
whether Landlord receives any insurance proceeds, this Lease shall
terminate as of the date the destruction occurred. Notwithstanding
the preceding sentence, if the Property can be rebuilt within six
(6) months after the date of destruction, Landlord may elect to
rebuild the Property at Landlord's own expense, in which case this
Lease shall remain in full force and effect Landlord shall notify
Tenant of such election within thirty (30) days after Tenant's
notice of the occurrence of total or substantial destruction. If
Landlord so elects, Landlord shall rebuild the Property at
Landlord's sole expense, except that if the destruction was caused
by an act or omission of Tenant, Tenant shall pay Landlord the
difference between the actual cost of rebuilding and any insurance
proceeds received by Landlord. If Landlord so elects to rebuild the
Property and does not complete such rebuilding within the six (6)
month period specified herein, either Landlord or Tenant may elect
to terminate this Lease as of the date the damage occurred provided
the party electing to terminate this Lease shall give written
notification to the other party of such election within ten (10)
days after the expiration of the six (6) month period specified
above.
Section 7.03.
Temporary Reduction of Rent.
If the
Property is destroyed or damaged and Landlord or Tenant repairs or
restores the Property pursuant to the provisions of this Article
Seven, any rent payable during the period of such damage, repair
and/or restoration shall be reduced according to the degree, if
any, to which Tenant's use of the Property is impaired. However,
the reduction shall not exceed the sum of one year's payment of
Base Rent, insurance premiums and real property taxes. Except for
such possible reduction in Base Rent, insurance premiums and real
property taxes, Tenant shall not be entitled to any compensation,
reduction, or reimbursement from Landlord as a result of any
damage, destruction, repair, or restoration of or to the
Property.
Section 7.04.
Waiver.
Tenant waives the protection of
any statute, code or judicial decision, which grants a tenant the
right to terminate a lease in the event of the substantial or total
destruction of the leased property. Tenant agrees that the
provisions of Section 7.02 above shall govern the rights and
obligations of Landlord and Tenant in the event of any substantial
or total destruction to the Property.
ARTICLE EIGHT: CONDEMNATION
If all
or any portion of the Property is taken under the power of eminent
domain or sold under the threat of that power (all of which are
called "Condemnation"), this Lease shall terminate as to the part
taken or sold on the date the condemning authority takes title or
possession, whichever occurs first. If more than twenty percent
(20%) of the floor area of the building in which the Property is
located, or which is located on the Property, is taken, either
Landlord or Tenant may terminate this Lease as of the date the
condemning authority takes title or possession, by delivering
written notice to the other within ten (10) days after receipt of
written notice of such taking (or in the absence of such notice,
within ten (10) days after the condemning authority takes title or
possession). If neither Landlord nor Tenant terminates this Lease,
this Lease shall remain in effect as to the portion of the Property
not taken, except that the Base Rent and Additional Rent shall be
reduced in proportion to the reduction in the floor area of the
Property. Any Condemnation award or payment shall be distributed in
the following order: (a) first, to any ground lessor, mortgagee or
beneficiary under a deed of trust encumbering the Property, the
amount of its interest in the Property; (b) second, to Tenant, only
the amount of any award specifically designated for loss of or
damage to Tenant's trade fixtures or removable personal property;
and (c) third, to Landlord, the remainder of such award, whether as
compensation for reduction in the value of the leasehold, the
taking of the fee, or otherwise. If this Lease is not terminated,
Landlord shall repair any damage to the Property caused by the
Condemnation, except that Landlord shall not be obligated to repair
any damage for which Tenant has been reimbursed by the condemning
authority. If the severance damages received by Landlord are not
sufficient to pay for such repair, Landlord shall have the right to
either terminate this Lease or make such repair at Landlord's
expense.
ARTICLE NINE: ASSIGNMENT AND SUBLETTING
Section 9.01.
Landlord's Consent Required.
No portion
of the Property or of Tenant's interest in this Lease may be
acquired by any other person or entity, whether by sale,
assignment, mortgage, sublease, transfer, operation of law, or act
of Tenant, without Landlord's prior written consent which consent
shall not be unreasonably be withheld as provided for in Section
9.04(a) below, except as provided in Section 9.02 below. Landlord
has the right to grant or withhold its consent as provided in
Section 9.04 below. Any attempted transfer without consent shall be
void and shall constitute a non-curable breach of this Lease. If
Tenant is a partnership, any cumulative transfer of more than
twenty percent (20%) of the partnership interests shall require
Landlord's consent. If Tenant is a corporation, any change in the
ownership of a controlling interest of the voting stock of the
corporation shall require Landlord's consent.
Section 9.02.
Tenant Affiliate.
Tenant may assign this
Lease or sublease the Property, without Landlord's consent, to any
corporation, which controls, is controlled by or is under common
control with Tenant, or to any corporation resulting from the
merger of or consolidation with Tenant (“Tenant’s
Affiliate”). In such case, any Tenant's Affiliate shall
assume in writing all of Tenant's obligations under this Lease and
provide Landlord with a signed copy of such assignment and
assumption agreement which shall be acceptable to Landlord in
it’s reasonable opinion.
Section 9.03.
No Release of Tenant.
No transfer
permitted by this Article Nine, including a transfer to a Tenant
Affiliate, whether with or without Landlord's consent, shall
release Tenant or change Tenant's primary liability to pay the rent
and to perform all other obligations of Tenant under this Lease.
Landlord's acceptance of rent from any other person is not a waiver
of any provision of this Article Nine. Consent to one transfer is
not a consent to any subsequent transfer. If Tenant's transferee
defaults under this Lease, Landlord may proceed directly against
Tenant without pursuing remedies against the transferee. Landlord
may consent to subsequent assignments or modifications of this
Lease by Tenant's transferee, without notifying Tenant or obtaining
its consent. Such action shall not relieve Tenant's liability under
this Lease. Notwithstanding the foregoing, in the event this Lease
is transferred and subsequently terminated by reason of (i) the
default of the any transferee, pursuant to the provisions thereof
or (ii) the disaffirmance or rejection of this Lease in any
bankruptcy or insolvency proceedings, Tenant shall, upon request
from Landlord: (a) pay to Landlord all rent, additional rent and
other charges due and owing to Landlord under the Lease to and
including the date of such termination, disaffirmance or rejection;
and (b) enter, as “Tenant”, into a new lease (the
“New Lease”) with Landlord, for the Property for a term
commencing on the effective date of such termination, disaffirmance
or rejection, and ending on the natural expiration date of the
Lease at the same rent, additional rent and upon the same executory
terms, covenants and conditions as are contained in the Lease,
except that: (c) Tenant’s rights under the New Lease shall be
subject to the possessory rights (if any) of the transferee under
the Lease and the possessory rights (if any) of any person, firm or
corporation claiming by, through or under the transferee or by
virtue of any statute or of any order of any court; and (d) such
New Lease with Tenant shall require that all defaults existing
under the Lease be cured by Tenant within thirty (30) days of the
commencement date of the New Lease (as specified above). In the
event Tenant shall default in its obligation to enter into such New
Lease and such default shall continue for a period of 10 (ten) days
following Landlord’s written request therefore, then Landlord
shall have all rights, claims and remedies by reason of such
default, either at law or/in equity against Tenant, and in
addition, all rights, claims and remedies against Tenant as if
Tenant had entered into said New Lease and defaulted
thereunder.
Section
9.04. Landlord's Consent.
(a)
Tenant's request for consent to
any transfer described in Section 9.01 shall set forth in writing
the details of the proposed transfer, including the name, business
and financial condition of the prospective transferee, financial
details of the proposed transfer (e.g., the term of and the rent
and security deposit payable under any proposed assignment or
sublease), and any other information Landlord deems relevant.
Landlord shall have the right to withhold consent, if reasonable,
or to grant consent, based on the following factors: (i) the
business of the proposed assignee or subtenant and the proposed use
of the Property; (ii) the net worth and financial reputation of the
proposed assignee or subtenant; (iii) Tenant's compliance with all
of its obligations under the Lease; and (iv) such other factors as
Landlord may reasonably deem relevant. If Landlord objects to a
proposed assignment solely because of the net worth and/or
financial reputation of the proposed assignee, Tenant may
nonetheless sublease (but not assign), all or a portion of the
Property to the proposed transferee, but only on the other terms of
the proposed transfer.
(b)
If Tenant assigns or subleases,
the following shall apply:
(i)
Tenant shall pay to Landlord as
Additional Rent under the Lease the Landlord's Share (stated in
Section 1.13) of the Profit (defined below) on such transaction as
and when received by Tenant, unless Landlord gives written notice
to Tenant and the assignee or subtenant that Landlord's Share shall
be paid by the assignee or subtenant to Landlord directly. The
"Profit" means (A) all amounts paid to Tenant for such assignment
or sublease, including "key" money, monthly rent in excess of the
monthly rent payable under the Lease, and all fees and other
consideration paid for the assignment or sublease, including fees
under any collateral agreements, less (B) costs and expenses
directly incurred by Tenant in connection with the execution and
performance of such assignment or sublease for real estate broker's
commissions and costs of renovation or construction of tenant
improvements required under such assignment or sublease. Tenant is
entitled to recover such costs and expenses before Tenant is
obligated to pay the Landlord's Share to Landlord. The Profit in
the case of a sublease of less than all the Property is the rent
allocable to the subleased space as a percentage on a square
footage basis.
(ii)
Tenant shall provide Landlord
a written statement certifying all amounts to be paid from any
assignment or sublease of the Property within thirty (30) days
after the transaction documentation is signed, and Landlord may
inspect Tenant's books and records to verify the accuracy of such
statement. On written request, Tenant shall promptly furnish to
Landlord copies of all the transaction documentation, all of which
shall be certified by Tenant to be complete, true and correct.
Landlord's receipt of Landlord's Share shall not be a consent to
any further assignment or subletting. The breach of Tenant's
obligation under this Paragraph 9.04(b) shall be a material default
of the Lease.
Section 9.05.
No Merger.
No merger shall result from
Tenant's sublease of the Property under this Article Nine, Tenant's
surrender of this Lease or the termination of this Lease in any
other manner. In any such event, Landlord may terminate any or all
sub-tenancies or succeed to the interest of Tenant as sub-landlord
under any or all sub-tenancies.
ARTICLE TEN: DEFAULTS; REMEDIES
Section 10.01.
Covenants and Conditions.
Tenant's
performance of each of Tenant's obligations under this Lease is a
condition as well as a covenant. Tenant's right to continue in
possession of the Property is conditioned upon such performance.
Time is of the essence in the performance of all covenants and
conditions.
Section 10.02.
Defaults.
Tenant shall be in material
default under this Lease:
(a)
If Tenant abandons the Property without making adequate provision
for the maintenance and security thereof;
(b)
If Tenant fails to
pay rent or any other charge when due;
(c)
If Tenant fails to
provide liability insurance pursuant to Paragraph 4.04(a) of the
Lease for a period of five (5) days after written notice from
Landlord;
(d)
If Tenant fails to perform any
of Tenant's non-monetary obligations under this Lease for a period
of ten (10) days after written notice from Landlord; provided that
if more than ten (10) days are required to complete such
performance, Tenant shall not be in default if Tenant commences
such performance within the ten (10) -day period and thereafter
diligently pursues its completion. However, Landlord shall not be
required to give such notice if Tenant's failure to perform
constitutes a non-curable breach of this Lease. The notice required
by this Paragraph is intended to satisfy any and all notice
requirements imposed by law on Landlord and is not in addition to
any such requirement.
(e)
(i) If Tenant makes a general
assignment or general arrangement for the benefit of creditors;
(ii) if a petition for adjudication of bankruptcy or for
reorganization or rearrangement is filed by or against Tenant and
is not dismissed within thirty (30) days; (iii) if a trustee or
receiver is appointed to take possession of substantially all of
Tenant's assets located at the Property or of Tenant's interest in
this Lease and possession is not restored to Tenant within thirty
(30) days; or (iv) if substantially all of Tenant's assets located
at the Property or of Tenant's interest in this Lease is subjected
to attachment, execution or other judicial seizure which is not
discharged within thirty (30) days. If a court of competent
jurisdiction determines that any of the acts described in this
subparagraph (d) is not a default under this Lease, and a trustee
is appointed to take possession (or if Tenant remains a debtor in
possession) and such trustee or Tenant transfers Tenant's interest
hereunder, then Landlord shall receive, as Additional Rent, the
excess, if any, of the rent (or any other consideration) paid in
connection with such assignment or sublease over the rent payable
by Tenant under this Lease.
(f)
If any guarantor of the Lease
revokes or otherwise terminates, or purports to revoke or otherwise
terminate, any guaranty of all or any portion of Tenant's
obligations under the Lease. Unless otherwise expressly provided,
no guaranty of the Lease is revocable.
Section 10.03
.
Remedies.
On the occurrence of any
material default by Tenant, Landlord may, at any time thereafter,
with or without notice or demand and without limiting Landlord in
the exercise of any right or remedy, which Landlord may
have:
(a)
Terminate this Lease and the Term
created hereby, in which event Landlord may forthwith repossess the
Property and be entitled to recover forthwith as damages a sum of
money equal to the value of the Base Rent and Additional Rent
provided to be paid by Tenant for the balance of the stated Term of
the Lease, less the fair rental value of the Property for said
period, and any other sum of money and damages owed by Tenant to
Landlord.
(b)
Terminate Tenant's right of
possession and may repossess the Property by forcible entry or
detainer suit or otherwise, without demand or notice of any kind to
Tenant and without terminating this Lease, in which event Landlord
may, but shall be under no obligation so to do, relet all or any
part of the Property for such rent and upon such terms as shall be
satisfactory to Landlord (including the right to relet the Property
for a term greater or lesser than that remaining under the Term of
this Lease and the right to relet the Property as a part of a
larger area and the right to change the character or use made of
the Property). For the purpose of such reletting, Landlord is
authorized to decorate or to make any repairs, changes, alterations
or additions in or to the Property that may be necessary or
convenient, and if Landlord shall fail or refuse to relet the
Property, or if the Property are relet and a sufficient sum shall
not be realized from such reletting after paying all of the costs
and expenses of such decorations, repairs, changes, alterations and
additions, and the expenses of such reletting (including leasing
commissions) and of the collection of the rent accruing therefrom
to satisfy the rent provided for in this Lease to be paid, then
Tenant shall pay to Landlord as damages a sum equal to the amount
of the Base Rent and rent adjustments reserved in this Lease for
such period or periods, or, if the Property have been relet, Tenant
shall satisfy and pay any such deficiency upon demand therefore
from time to time, and Tenant agrees that Landlord may file suit to
recover any sums falling due under the terms of this paragraph and
any other sums due under this Lease from time to time, and that no
suit or recovery of any portion due Landlord hereunder shall be any
defense to any subsequent action brought for any amount not
theretofore reduced to judgment in favor of Landlord.
(c)
Obtain the appointment of a receiver
in any court of competent jurisdiction, and the receiver may take
possession of any personal property belonging to Tenant and used in
the conduct of the business of Tenant being carried on in the
Property. Tenant agrees that the entry upon the Property or
possession of said personal property by said receiver shall not
constitute an eviction of Tenant from the Property or any portion
thereof, and Tenant agrees to indemnify, defend and hold Landlord
harmless for, from and against any claim of any character by any
person arising out of or in any way connected with the entry by
said receiver in taking possession of the Property or said personal
property.
(d)
Pursue any other remedy now or
hereafter available to Landlord under the laws or judicial
decisions of the state in which the Property is
located.
No act
or conduct of the Landlord, whether consisting of reentry, taking
possession, or reletting the Property or obtaining appointment of a
receiver or accepting the keys to the Property, or otherwise, prior
to the expiration of the Lease Term shall be deemed to be or
constitute an acceptance of the surrender of the Property by the
Landlord or an election to terminate this Lease unless Landlord
exercises its election under Section 10.03(a) above. Such
acceptance or election by Landlord shall only be effected, and must
be evidenced, by written acknowledgement of acceptance of surrender
or notice of election to terminate signed by Landlord.
Section 10.04.
Repayment of "Free" Rent
. If this Lease
provides for a postponement of any monthly rental payments, a
period of "free" rent or other rent concession, such postponed rent
or "free" rent is called the "Abated Rent". Tenant shall be
credited with having paid all of the Abated Rent on the expiration
of the Lease Term only if Tenant has fully, faithfully, and
punctually performed all of Tenant's obligations hereunder,
including the payment of all rent (other than the Abated Rent) and
all other monetary obligations and the surrender of the Property in
the physical condition required by this Lease. Tenant acknowledges
that its right to receive credit for the Abated Rent is absolutely
conditioned upon Tenant's full, faithful and punctual performance
of its obligations under this Lease. If Tenant defaults and does
not cure within any applicable grace period, the Abated Rent shall
immediately become due and payable in full and this Lease shall be
enforced as if there were no such rent abatement or other rent
concession. In such case Abated Rent shall be calculated based on
the full initial rent payable under this Lease.
Section 10.05. Cumulative Remedies.
Landlord's exercise of any right or remedy shall not prevent it
from exercising any other right or remedy.
ARTICLE ELEVEN: PROTECTION OF LENDERS
Section 11.01.
Subordination.
Landlord shall have the
right to subordinate this Lease to any ground lease, deed of trust
or mortgage encumbering the Property, any advances made on the
security thereof and any renewals, modifications, consolidations,
replacements or extensions thereof, whenever made or recorded.
Tenant shall cooperate with Landlord and any lender, which is
acquiring a security interest in the Property or the Lease. Tenant
shall execute such further documents and assurances as such lender
may require, provided that Tenant's obligations under this Lease
shall not be increased in any material way (the performance of
ministerial acts shall not be deemed material), and Tenant shall
not be deprived of its rights under this Lease. Tenant's right to
quiet possession of the Property during the Lease Term shall not be
disturbed if Tenant pays the rent and performs all of Tenant's
obligations under this Lease and is not otherwise in default. If
any ground lessor, beneficiary or mortgagee elects to have this
Lease prior to the lien of its ground lease, deed of trust or
mortgage and gives written notice thereof to Tenant, this Lease
shall be deemed prior to such ground lease, deed of trust or
mortgage whether this Lease is dated prior or subsequent to the
date of said ground lease, deed of trust or mortgage or the date of
recording thereof.
Section 11.02.
Attornment.
If Landlord's interest in
the Property is acquired by any ground lessor, beneficiary under a
deed of trust, mortgagee, or purchaser at a foreclosure sale,
Tenant shall attorn to the transferee of or successor to Landlord's
interest in the Property and recognize such transferee or successor
as Landlord under this Lease. Tenant waives the protection of any
statute or rule of law, which gives or purports to give Tenant any
right to terminate this Lease or surrender possession of the
Property upon the transfer of Landlord's interest.
Section 11.03.
Signing of Documents.
Tenant shall sign
and deliver any instrument or documents necessary or appropriate to
evidence any such attornment or subordination or agreement to do
so. If Tenant fails to do so within ten (10) days after written
request, Tenant hereby makes, constitutes and irrevocably appoints
Landlord, or any transferee or successor of Landlord, the
attorney-in-fact of Tenant to execute and deliver any such
instrument or document.
Section
11.04. Estoppel Certificates.
(a)
Upon Landlord's written
request, Tenant shall execute, acknowledge and deliver to Landlord
a written statement certifying: (i) that none of the terms or
provisions of this Lease have been changed (or if they have been
changed, stating how they have been changed); (ii) that this Lease
has not been canceled or terminated; (iii) the last date of payment
of the Base Rent and other charges and the time period covered by
such payment; (iv) that Landlord is not in default under this Lease
(or, if Landlord is claimed to be in default, stating why); and (v)
such other representations or information with respect to Tenant or
the Lease as Landlord may reasonably request or which any
prospective purchaser or encumbrancer of the Property may require.
Tenant shall deliver such statement to Landlord within ten (10)
days after Landlord's request. Landlord may give any such statement
by Tenant to any prospective purchaser or encumbrancer of the
Property. Such purchaser or encumbrancer may rely conclusively upon
such statement as true and correct.
(b)
If Tenant does not deliver such
statement to Landlord within such ten (10)-day period, Landlord,
and any prospective purchaser or encumbrancer, may conclusively
presume and rely upon the following facts: (i) that the terms and
provisions of this Lease have not been changed except as otherwise
represented by Landlord; (ii) that this Lease has not been canceled
or terminated except as otherwise represented by Landlord; (iii)
that not more than one month's Base Rent or other charges have been
paid in advance; and (iv) that Landlord is not in default under the
Lease. In such event, Tenant shall be estopped from denying the
truth of such facts.
Section 11.05.
Tenant’s Financial Condition.
Within ten (10) days after written request from Landlord, Tenant
shall deliver to Landlord such financial statements as Landlord
reasonably requires to verify the net worth of Tenant or any
assignee, subtenant, or guarantor of Tenant. In addition, Tenant
shall deliver to any lender designated by Landlord any financial
statements required by such lender to facilitate the financing or
refinancing of the Property. Tenant represents and warrants to
Landlord that each such financial statement is a true and accurate
statement as of the date of such statement. All financial
statements shall be confidential and shall be used only for the
purposes set forth in this Lease.
ARTICLE TWELVE: LEGAL COSTS
Section 12.01.
Legal Proceedings.
If Tenant or Landlord
shall be in breach or default under this Lease, such party (the
"Defaulting Party") shall reimburse the other party (the
"Nondefaulting Party") upon demand for any costs or expenses that
the Nondefaulting Party incurs in connection with any breach or
default of the Defaulting Party under this Lease, whether or not
suit is commenced or judgment entered. Such costs shall include
legal fees and costs incurred for the negotiation of a settlement,
enforcement of rights or otherwise. Furthermore, if any action for
breach of or to enforce the provisions of this Lease is commenced,
the court in such action shall award to the party in whose favor a
judgment is entered, a reasonable sum as attorneys' fees and costs.
The losing party in such action shall pay such attorneys' fees and
costs. Tenant shall also indemnify Landlord against and hold
Landlord harmless from all costs, expenses, demands and liability
Landlord may incur if Landlord becomes or is made a party to any
claim or action (a) instituted by Tenant against any third party,
or by any third party against Tenant, or by or against any person
holding any interest under or using the Property by license of or
agreement with Tenant; (b) for foreclosure of any lien for labor or
material furnished to or for Tenant or such other person; (c)
otherwise arising out of or resulting from any act or transaction
of Tenant or such other person; or (d) necessary to protect
Landlord's interest under this Lease in a bankruptcy proceeding, or
other proceeding under Title 11 of the United States Code, as
amended. Tenant shall defend Landlord against any such claim or
action at Tenant's expense with counsel reasonably acceptable to
Landlord or, at Landlord's election, Tenant shall reimburse
Landlord for any legal fees or costs Landlord incurs in any such
claim or action.
Section 12.02.
Landlord's Consent.
Tenant shall pay
Landlord's reasonable attorneys' fees incurred in connection with
Tenant's request for Landlord's consent under Article Nine
(Assignment and Subletting), or in connection with any other act
which Tenant proposes to do and which requires Landlord's consent.
Tenant shall also pay Landlord’s attorneys’ fees
incurred in connection with any other request or act by
Tenant.
ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS
Section 13.01.
Non-Discrimination.
Tenant promises, and
it is a condition to the continuance of this Lease, that there will
be no discrimination against, or segregation of, any person or
group of persons on the basis of race, color, sex, creed, national
origin or ancestry in the leasing, subleasing, transferring,
occupancy, tenure or use of the Property or any portion
thereof.
Section
13.02. Landlord's Liability; Certain Duties.
(a)
As used in this Lease, the term
"Landlord" means only the current owner or owners of the fee title
to the Property or Project or the leasehold estate under a ground
lease of the Property or Project at the time in question. Each
Landlord is obligated to perform the obligations of Landlord under
this Lease only during the time such Landlord owns such interest or
title. Any Landlord who transfers its title or interest is relieved
of all liability with respect to the obligations of Landlord under
this Lease to be performed on or after the date of transfer.
However, each Landlord shall deliver to its transferee all funds
that Tenant previously paid if such funds have not yet been applied
under the terms of this Lease.
(b)
Tenant shall give written
notice of any failure by Landlord to perform any of its obligations
under this Lease to Landlord and to any ground lessor, mortgagee or
beneficiary under any deed of trust encumbering the Property whose
name and address have been furnished to Tenant in writing. Landlord
shall not be in default under this Lease unless Landlord (or such
ground lessor, mortgagee or beneficiary) fails to cure such
non-performance within thirty (30) days after receipt of Tenant's
notice. However, if such non-performance reasonably requires more
than thirty (30) days to cure, Landlord shall not be in default if
such cure is commenced within such thirty (30)-day period and
thereafter diligently pursued to completion.
(c)
Notwithstanding any term or
provision herein to the contrary, the liability of Landlord for the
performance of its duties and obligations under this Lease is
limited to Landlord's interest in the Property and the Project, and
neither the Landlord nor its partners, shareholders, officers or
other principals shall have any personal liability under this
Lease.
Section 13.03.
Severability.
A determination by a court
of competent jurisdiction that any provision of this Lease or any
part thereof is illegal or unenforceable shall not cancel or
invalidate the remainder of such provision or this Lease, which
shall remain in full force and effect.
Section 13.04.
Interpretation.
The captions of the
Articles or Sections of this Lease are to assist the parties in
reading this Lease and are not a part of the terms or provisions of
this Lease. Whenever required by the context of this Lease, the
singular shall include the plural and the plural shall include the
singular. The masculine, feminine and neuter genders shall each
include the other. In any provision relating to the conduct, acts
or omissions of Tenant, the term "Tenant" shall include
Tenant’s agents' employees, contractors, invitees, successors
or others using the Property with Tenant's expressed or implied
permission.
Section 13.05.
Incorporation of Prior Agreements;
Modifications.
This Lease is the only agreement between the
parties pertaining to the lease of the Property and no other
agreements are effective. All amendments to this Lease shall be in
writing and signed by all parties. Any other attempted amendment
shall be void.
Section 13.06.
Notices.
All notices required or
permitted under this Lease shall be in writing and shall be
personally delivered or sent by certified mail, return receipt
requested, postage prepaid, or delivered by reputable overnight
courier. Notices to Tenant shall be delivered to the address
specified in Section 1.03 above. Notices to Landlord shall be
delivered to the address specified in Section 1.02 above. All
notices shall be effective upon delivery, or attempted delivery if
the proper notice address is not valid, or if delivery is refused.
Either party may change its notice address upon written notice to
the other party.
Section 13.07.
Waivers.
All waivers must be in writing
and signed by the waiving party. Landlord's failure to enforce any
provision of this Lease or its acceptance of rent shall not be a
waiver and shall not prevent Landlord from enforcing that provision
or any other provision of this Lease in the future. No statement on
a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without
notice to Tenant, negotiate such check without being bound to the
conditions of such statement.
Section 13.08. No
Recordation.
Tenant shall not record this Lease or any
memorandum thereof.
Section 13.09
.
Binding Effect; Choice of Law.
This
Lease binds any party who legally acquires any rights or interest
in this Lease from Landlord or Tenant. However, Landlord shall have
no obligation to Tenant's successor unless the rights of interests
of Tenant's successor are acquired in accordance with the terms of
this Lease. The laws of the state in which the Property is located
shall govern this Lease.
Section 13.10
.
Corporate Authority; Partnership
Authority.
If Tenant is a corporation or limited liability
company, each person signing this Lease on behalf of Tenant
represents and warrants that he has full authority to do so and
that this Lease binds the corporation. Within thirty (30) days
after this Lease is signed, Tenant shall deliver to Landlord a
certified copy of a resolution of Tenant's Board of Directors
authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a
partnership, each person or entity signing this Lease for Tenant
represents and warrants that he or it is a general partner of the
partnership, that he or it has full authority to sign for the
partnership and that this Lease binds the partnership and all
general partners of the partnership. Tenant shall give written
notice to Landlord of any general partner's withdrawal or addition.
Within thirty (30) days after this Lease is signed, Tenant shall
deliver to Landlord a copy of Tenant's recorded statement of
partnership or certificate of limited partnership.
Section 13.11.
Joint and Several Liability.
All parties
signing this Lease as Tenant shall be jointly and severally liable
for all obligations of Tenant.
Section 13.12.
Force Majeure.
If Landlord cannot
perform any of its obligations due to events beyond
Landlord’s control, the time provided for performing such
obligations shall be extended by a period of time equal to the
duration of such events. Events beyond Landlord's control include,
but are not limited to, acts of God, war, civil commotion, labor
disputes, strikes, fire, flood or other casualty, shortages of
labor or material, government regulation or restriction and weather
conditions.
Section 13.13.
Execution of Lease.
This Lease may be
executed in counterparts and, when all counterpart documents are
executed, the counterparts shall constitute a single binding
instrument. Landlord's delivery of this Lease to Tenant shall not
be deemed to be an offer to lease and shall not be binding upon
either party until executed and delivered by both
parties.
Section 13.14.
Survival.
All representations and
warranties of Landlord and Tenant shall survive the termination of
this Lease.
Section 13.15. VENUE.
Tenant
acknowledges and agrees that this Lease shall be construed and
enforced in accordance with the law of the State of Arizona. Tenant
consents and submits to the jurisdiction of the state court located
in Maricopa County, Arizona, and any action or suit concerning this
Lease or related matters shall only be brought by the parties in
state court exclusively with appropriate subject matter
jurisdiction sitting in Maricopa County, Arizona. The parties
hereby waive any of their rights to remove any court action to
Federal court. Tenant acknowledges and agrees that Tenant shall not
raise in connection with any dispute arising hereunder, and hereby
waive, any defenses based upon venue, inconvenience of forum or
lack of personal jurisdiction in any action or suit brought in
accordance with the foregoing.
Section 13.16. WAIVER OF RIGHT TO JURY
TRIAL.
TENANT WAIVES THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY OF ANY CONTRACT OR TORT CLAIM, COUNTERCLAIM, CROSS-COMPLAINT
OR CAUSE OF ACTION IN ANY ACTION, PROCEEDING OR HEARING BROUGHT BY
EITHER LANDLORD OR TENANT AGAINST THE OTHER ON ANY MATTER ARISING
OUT OF OR IN ANY WAY CONNECTED TO THIS LEASE, THE RELATIONSHIP OF
LANDLORD AND TENANT OR TENANT'S USE OR OCCUPANCY OF THE PROPERTY,
INCLUDING ANY CLAIM OF INJURY OR DAMAGE OR THE ENFORCEMENT OF ANY
REMEDY UNDER ANY CURRENT OR FUTURE LAW, STATUTE, REGULATION, CODE
OR ORDINANCE.
ARTICLE FOURTEEN: BROKERS
Section 14.01.
Broker’s Fee.
When this Lease is
signed by and delivered to both Landlord and Tenant, Landlord shall
pay a real estate commission to Landlord’s Broker named in
Section 1.08 above, if any, as provided in the written agreement
between Landlord and Landlord’s Broker. If a Tenant’s
Broker is named in Section 1.08 above, Landlord’s Broker
shall pay an appropriate portion of its commission to
Tenant’s Broker if so provided in any agreement between
Landlord’s Broker and Tenant’s Broker. Nothing
contained in this Lease shall impose any obligation on Landlord to
pay a commission or fee to any party other than Landlord’s
Broker.
Section 14.02.
Agency Disclosure; No Other Brokers.
Landlord and Tenant each warrant that they have dealt with no other
real estate broker(s) in connection with this transaction except:
Commercial
Properties
, who represents Landlord and
Lee & Associates
who
represents Tenant.
In the
event that
Commercial
Properties
represents both Landlord and Tenant, Landlord and
Tenant hereby confirm that they were timely advised of the dual
representation and that they consent to the same, and that they do
not expect said broker to disclose to either of them the
confidential information of the other party.
ARTICLE FIFTEEN: COMPLIANCE
The
parties hereto agree to comply with all applicable federal, state
and local laws, regulations, codes, ordinances and administrative
orders having jurisdiction over the parties, property or the
subject matter of this Agreement, including, but not limited to,
the 1964 Civil Rights Act and all amendments thereto, the Foreign
Investment In Real Property Tax Act, the Comprehensive
Environmental Response Compensation and Liability Act, and The
Americans With Disabilities Act.
ADDITIONAL
PROVISIONS ARE SET FORTH IN RIDER NO. 1 ATTACHED
HERETO.
[SIGNATURES
ON FOLLOWING PAGE]
Landlord
and Tenant have signed this Lease at the place and on the dates
specified adjacent to their signatures below and have initialed all
Riders which are attached to or incorporated by reference in this
Lease.
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"LANDLORD":
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Signed on June 4,
2019
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JM SKY HARBOR PROPERTIES LLC,
an
Arizona limited liability
company
By:
/s/
Joyce Monkarsh
Joyce Monkarsh,
Authorized
Representative
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"TENANT":
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Signed on May 30,
2019
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Wrap Technologies, Inc., a
Delaware
corporation
By:
/s/ David
Norris
Printed Name: David Norris
Its: CEO
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IN ANY
REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT WITH A
PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR
OTHER PERSON WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE
PROPERTY, INCLUDING THE POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS
MATERIALS AND UNDERGROUND STORAGE TANKS.
RIDER N0. 1
THIS RIDER NO. 1
("Rider No. 1") is dated for reference
purposes as of
May 10,
2019,
and is made by and between
JM SKY HARBOR PROPERTIES LLC, an
Arizona limited liability company
(
"
Landlord
"
) and
Wrap Technologies, Inc., a Delaware
corporation
(
"
Tenant
"
) to be a part of that certain
Industrial Real Estate Lease (Multi-Tenant Form) of even date
herewith between Landlord and Tenant (the "Lease") concerning
Property more commonly known as
1817 W. 4
th
Street, Tempe, AZ
(
the
"
Property
"
). Landlord and Tenant agree that the
Lease is hereby modified and supplemented as follows:
1.
Section 1.12(a) (Base Rent) of the Lease shall be amended by adding
the following:
“The Base
Rent during the Term shall be as follows:
June 1, 2019
– July 31, 2019
$ 0.00 per month
NNN
August 1, 2019
– May 31, 2020
$7,654.00 per month
NNN
June 1, 2020
– May 31, 2021
$7,884.00 per month
NNN
June 1, 2021
– May 31, 2022
$8,120.00 per month
NNN
June 1, 2022
– July 31, 2022
$8,364.00 per month
NNN
In
addition to Base Rent and other charges payable under the terms of
this Lease, Tenant shall pay Landlord the amount of any transaction
privilege tax, rent tax, sales tax, gross proceeds tax, use tax,
occupancy tax or like tax (excluding income taxes) levied, assessed
or imposed by any federal, state, county or municipal governmental
authority, or any subdivision thereof, upon or measured by any rent
or other charge payable under this Lease.”
2. Property Condition:
The Property is being leased in broom
clean “As-Is” condition with all systems in good
working condition as of the date Tenant takes possession of the
Property or the Commencement Date in Section 1.05, whichever is the
earliest to occur.
If any
improvements or other work is required by any local, state or
federal agencies for Tenant’s occupancy and/or use of the
Property, Tenant shall be solely responsible for the cost of said
improvements and work.
3.
Rules and Regulations:
a)
Parking or storage
of vehicles overnight is prohibited, except temporary (including
overnight and weekend) parking of delivery trucks and trailers at
the dock and grade level door positions of the Property. In no
event may Tenant park trucks or trailers behind any other tenants
leased property in the Project, or any other areas not specifically
designated for truck and trailer parking.
b)
Absolutely no
parking at any time in any areas designated as "No Parking" or
"Fire Lane" or in any truck dock or ramp position not a part of the
Property.
c)
Absolutely no
parking of trailers, boats or any other vehicles or
equipment.
d)
Absolutely no
maintenance is to be performed on any trucks, automobiles, trailers
or other equipment other than tire changes and safety
checks.
e)
Unusual expenses
created by the washing of vehicles will result in special
assessment to Tenant for water and/or physical repair of the
Property.
f)
Absolutely no
outside storage is allowed, including but not limited to pallets,
equipment, work in progress, or raw materials.
g)
Tenant shall not do
or permit anything to be done which is a nuisance or interferes
with any other tenant in the Project.
h)
No pets or
livestock are allowed in or about the Property or
Project.
4.
Mechanic's
Lien:
Should any mechanics or other lien be filed against
the Property or any part thereof by reason of Tenant's acts or
omissions or because of a claim against Tenant, Tenant shall cause
the same to be canceled and discharged of record by bond or
otherwise with ten (10) days of Tenant's receipt of notice by
Landlord.
5.
Financial
Strength:
Tenant and its officers covenant and warrant that
as of the Commencement
Date of the Lease,
Tenant has the financial strength and assets to meet all of its
obligations under the terms and conditions of the Lease. Tenant and
its officers also covenants and warrants, at the time of Lease
signature, that neither Tenant or any Tenant affiliate are: 1) in
default under any terms and conditions of any other lease for real
property, 2) in default for any monetary obligation, 3) in
foreclosure on any real property, or 4) under the protection of any
bankruptcy codes.
6.
Binding
Force:
Submission of this Rider No. 1 is not an offer to
lease or amend the Lease. This Rider No. 1 shall become binding
upon Landlord and Tenant only when this Rider No. 1 is fully
executed and delivered by Landlord. In the event Landlord does not
execute and deliver this Rider No. 1, then this Rider No. 1 shall
be void and of no force or effect.
7.
Ratification of
Lease:
The terms of the Lease are amended to reflect the
changes set forth above. In all other respects the terms of the
Lease shall be in full force and effect. In the event of any
conflict between this Rider No. 1 and the Lease, the terms of this
Rider No. 1 shall be deemed controlling.
8.
Capitalized
Terms:
Except as otherwise expressly provided herein, the
capitalized terms and phrases in this Rider No. 1 shall have the
same meanings as are given such terms in the Lease.
9.
Authority:
If Tenant is a corporation, limited liability company, trust or
general or limited partnership, each individual executing this
Rider No. 1 on behalf of such entity represents and warrants that
he or she is duly authorized to execute and deliver this Rider No.
1 on behalf of said entity.
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LANDLORD:
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TENANT:
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JM SKY
HARBOR PROPERTIES LLC, an Arizona limited liability
company
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Wrap
Technologies, Inc., a Delaware corporation
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By
/s/
Joyce Monkarsh
Joyce
Monkarsh,
Authorized Representative
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By:
/s/ David
Norris
Printed
Name: David Norris
Its:
CEO
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Option to Extend Term Lease Rider
This
Rider is attached to and made part of that certain Lease (the
“Lease”) dated May 10, 2019 between,
JM SKY HARBOR PROPERTIES LLC, an
Arizona limited liability company
(“Landlord”)
and
Wrap
Technologies, Inc., a Delaware corporation
(“Tenant”), covering the Property commonly known as
1817 W.
4
th
Street, Tempe, AZ
(the “Property”). The terms used herein shall have the
same definitions as set forth in the Lease. The provisions of this
Rider shall supersede any inconsistent or conflicting provisions of
the Lease.
A.
Option(s)
to Extend Term.
1. Grant
of Option.
Landlord hereby
grants to Tenant
one
(1) option(s) (the
“Option”) to extend the Lease Term for additional
term(s) of
three
(3) years (the “Extension”), on the same terms and
conditions as set forth in the Lease, but at an increased rent as
set forth below. Each Option shall be exercised only by written
notice delivered to Landlord at least one hundred eighty (180) days
before the expiration of the Lease Term. If Tenant fails to deliver
Landlord written notice of exercise of an Option within the
prescribed time period, such Option shall lapse, and there shall be
no further right to extend the Lease Term. The Option shall be
exercisable by Tenant on the expressconditions that (a) at the time
of the exercise, and at all time prior to the commencement of such
Extension, Tenant shall not be in default under any of the
provisions of the Lease and (b) Tenant has not been ten (10) or
more days late in the payment of rent more than a total of three
(3) times during the Lease Term.
2. Personal
Options.
The
Option is personal to the Tenant named in Section 1.03 of the Lease
or any Tenant’s Affiliate described in Section 9.02 of the
Lease. If Tenant subleases any portion of the Property or assigns
or otherwise transfers any interest under the Lease to any entity
other than a Tenant Affiliate prior to the exercise of an Option
(whether with or without Landlord’s consent), such Option
shall lapse. If Tenant subleases any portion of the Property or
assigns or otherwise transfers any interest of Tenant under the
Lease to any entity other than a Tenant Affiliate after the
exercise of an Option but prior to the commencement of the
respective Extension (whether with or without Landlord’s
consent), such Option shall lapse and the Lease Term shall expire
as if such Option were not exercised. If Tenant subleases any
portion of the Property or assigns or otherwise transfers any
interest of Tenant under the Lease in accordance with Article 9 of
the Lease after the exercise of an Option and after the
commencement of the Extension related to such Option, then the term
of the Lease shall expire upon the expiration of the Extension
during which such sublease or transfer occurred and only the
succeeding Options shall lapse.
The
Base Rent during the Extension(s)shall be determined by the
following method:
1.
Fair
Rental Value Adjustment as determined below.
Rental
Adjustment Date(s): The first day of the
first (1
st
)
month(s) of the
one (1) and only
Extension(s) of the Lease Term.
Fair
Rental Value Adjustment.
The
Base Rent shall be increased on the date(s) specified above (the
“Rental Adjustment Date(s)”) to the “fair rental
value” of the Property, determined in the following
manner:
(a)
Not later than one
hundred twenty (120) days prior to any applicable Rental Adjustment
Date, Landlord and Tenant shall meet in an effort to negotiate, in
good faith, the fair rental value of the Property as of such Rental
Adjustment Date. If Landlord and Tenant have not agreed upon the
fair rental value of the Property at lease ninety (90) days prior
to the applicable Rental Adjustment Date, the fair rental value
shall be determined by appraisal, by one or more brokers (herein
called “Broker(s)”), as provided in Section B.1(b),
below. Such broker(s) shall have at least five (5) years’
experience in the sales and leasing of commercial/industrial real
property in the area in which the Property is located and shall be
members of professional organizations such as the Society of
Industrial and Office Realtors or equivalent.
(b)
If Landlord and
Tenant are not able to agree upon the fair rental value of the
Property within the prescribed time period, then Landlord and
Tenant shall attempt to agree in good faith upon a single Broker
not later than seventy-five (75) days prior to the applicable
Rental Adjustment Date. If Landlord and Tenant are unable to agree
upon a single Broker within such time period, then Landlord and
Tenant shall each appoint one Broker not later than sixty-five (65)
days prior to the applicable Rental Adjustment Date. Within ten
(10) days thereafter, the two (2) appointed Brokers shall appoint a
third (3
rd
) Broker. If either
Landlord or Tenant fails to appoint its Broker within the
prescribed time period, the single Broker appointed shall determine
the fair rental value of the Property. If both parties fail to
appoint Brokers within the prescribed time periods, then the first
Broker thereafter selected by a party shall determine the fair
rental value of the Property. Each party shall bear the cost of its
own Broker and the parties shall share equally the cost of the
single or third Broker, if applicable.
(c)
For the purposes of
such appraisal, the term “fair market value” shall mean
the price that a ready and willing tenant would pay, as of the
applicable Rental Adjustment Date, as monthly rent to a ready and
willing landlord of property comparable to the Property if such
property were exposed for lease on the open market for a reasonable
period of time and taking into account all of the purposes for
which such property may be used. If a single Broker is chosen, then
such Broker shall determine the fair rental value of the Property.
Otherwise, the fair rental value of the Property shall be the
arithmetic average of the two (2) of the three (3) appraisals which
are closest in amount, and the third appraisal shall be
disregarded. In no event, however, shall the Base Rent be reduced
by reason of such computation. The fair rental value of the
Property shall also include annual rental escalations in accordance
with prevailing market customs and practices for properties
comparable to the Property. Landlord and Tenant shall instruct the
Broker(s) to complete the determination of the fair rental value
not later than thirty (30) days prior to the applicable Rental
Adjustment Date. If the fair rental value is not determined prior
to the applicable Rental Adjustment Date, then Tenant shall
continue to pay to Landlord the Base Rent applicable to the
Property immediately prior to such Extension, until the fair rental
value is determined. When the fair rental value of the Property is
determined, Landlord shall delivernotice thereof to Tenant, and
Tenant shall pay to Landlord, within ten (10) days after receipt of
such notice, the difference between the Base Rent actually paid by
Tenant to Landlord and the new Base Rent determined hereunder. In
no event shall the monthly base rent during the option period be
less than the monthly base rent for the immediate preceding rent
paying period.
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"LANDLORD":
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Signed on June 4,
2019
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JM SKY HARBOR PROPERTIES LLC,
an
Arizona limited liability
company
By:
/s/
Joyce Monkarsh
Joyce
Monkarsh,
Authorized
Representative
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"TENANT":
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Signed on May 30,
2019
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Wrap Technologies, Inc., a
Delaware
corporation
By:
/s/ David
Norris
Printed Name: David Norris
Its: CEO
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